The Rule of 30: A Better Way to Save for Retirement

by Frederick Vettese

Consider the age-old question of how much you should save to enjoy a comfortable Are your knees knocking? Are you nervously biting your nails?In The Rule of 30 personal finance expert Frederick Vettese provides a surprising — and hopeful — answer. Through conversations between a young couple and their neighbor, a retired actuary, the couple and the reader The Rule of 30 changes the mindset from saving the same flat percentage of pay to saving when it is most convenient to your situation. In most cases, it means less saving early on while mortgage payments are high and children are costly, and more saving later.Saving for retirement is a high priority, but it is not the only priority in life. It is time to dispense with old myths like “just save 10% of your take-home pay.” The truth is we should save differently throughout our pre-retirement years — and The Rule of 30 is a road map for doing so.

Genres: Personal Finance, Finance, Nonfiction, Personal Growth

208 pages, Kindle Edition

Published October 19, 2021

Reviews

[Travis Morton · Rating 5 out of 5]

Last year I read The Wealthy Barber and I remember thinking to myself, "I really like the style of this book, but some of the relevant information is 20 years out of date."

I think The Rule of 30 solved that problem for me. I love the narrative style (the story follows a young couple getting advice from their next door neighbour regarding retirement planning) and how it engages you as a reader while also delivering the waves of financial information in a paletable manner.

The general concept of the book is that retirement saving doesn't need to be rigid and can actually be flexible as you progress through the financialy tough and easy years of your life. Rather than saving a fixed percentage of your income, the author posits that you can reduce saving in hard years, and increase saving in easier (usually later) years.

He calls his method the rule of 30, whereby one allocates 30% of their pre-tax income towards retirement, mortgage, and large short-term expenses (like daycare) combined. He then uses the remainder of the book to stress test the assumptions of the method against historical and future worst case scenarios. Of course this is all done through the narrative of an ex-actuary helping his 30-something neighbours understand their finances. Good read!

[Gabrielle · Rating 5 out of 5]

I loved the format of the book, the storyline is quite unique in my opinion from various finance books. I also liked the fact that this book is current (discusses COVID, remote work, etc.) I think it’s an essential read for young folks especially those leaving their 20s and entering their 30s.

[Mitchell Mohorovich · Rating 5 out of 5]

A great book that provides a potential plan of how to save over your lifetime, that’s much more detailed and flexible than a fixed percentage.

It also discusses different investment classes: stocks, bonds, and real estate. All from a Canadian perspective—a great resource into understanding TFSAs, RRSPs, OAS, CPP and QPP, and the tax implications pre and post retirement.

A pleasant surprise was the discourse around inflation, interest rates, demographic projections, and how they could affect real investment gains.

Highly recommend! And should be followed by something like The Value of Simple—to better inform investors to what should be be purchased with their money saved.

[Sandy · Rating 2 out of 5]

While I respect anyone who writes a financial retirement savings book, this one is really not too good. (Better than not reading it for anyone trying to learn to save.)

The main premise is that instead of picking a fixed percentage like 12% of gross income to save on a consistent basis it espouses a variable rate of saving that adjusts over time to what can be afforded. For example it wants you to allocate 30% of gross to savings, housing and fixed costs like day care. The point he makes is that sometimes (early years) when buying a house and having children and paying daycare you can't afford too much. But you need to make up for it later in working carreer when house paid off or kids in elelmentary school.

It Fails to my way of thinking because it assumes too many things like:
- Someone is so disciplined that they may save only 5% in their 30s and actually revise it to save 30-40% in their 50s when house paid off and kids grown. Unrealistic to me.
- Everyone works their jobs (both spouses) all their life and uses daycare throughout the children's formative years.
- No private school costs until college.

Has some interesting things to say about interest rates and future stock returns and is especially good at explaining why Bonds are not going to be very effective in years to come. Also, is written from a Canadian perspective so you need to translate their retirement programs which have subtle differences to our Social Security, IRAs, Roths etc. but that was doable.

All in all, there are better books like the old standby that pretty much everyone should read like "The Wealthy Barber".

[Margaret · Rating 4 out of 5]

This book aims to answer a thorny question: How much should I be saving for retirement?

Unlike other books in the personal finance space that merely preach the benefits of saving a large percentage of one’s income starting at a young age, Vettese suggests a more realistic and ultimately reassuring approach with his "Rule of 30". Are you in your 30s and saddled with heavy mortgage payments and childcare costs? Are you in your 40s with little to show in retirement savings? Where other authors make you feel that it is too late to recover from a late start in saving or that a comfortable retirement is a hopeless dream, Vettese acknowledges the challenge of saving when resources are strained. Better still, he offers a clear path forward.

This book, along with Vettese’s earlier work "Retirement Income for Life", calmly demonstrate that a reasonable approach to saving for one’s retirement is within reach for most of us, provided we face our financial situations and take action, no matter our starting point. Written in a folksy and accessible style, this book is definitely recommended reading for anyone for whom the words “saving for retirement” elicit a sense of dread.

[otto365 · Rating 1 out of 5]

It is very hard to read such dialogue-type books. One simple sentence can be rewritten by different characters in three different ways, with unrelated information in between about how characters feel or what they do. Aa a result, it is very difficult to read this book. The main idea of this book is that your expenses vary throughout your life. To account for this, your savings should always total 30% of the following three catagories: (1) retirement savings; (2) mortgage expenses; (3) daycare/childcare expenses.

[V B · Rating 3 out of 5]

Good info, terrible delivery.

[Julia · Rating 4 out of 5]

This book was a bit bizarre, but I really enjoyed it! I've seen it recommended on PFC, so I wanted to give it a try, and I learned a lot more than I thought I would.

I think its strengths were that the dialogue-style suited the subject matter well, it went in-depth into the numbers and projections without losing the big picture, and it's always valuable to find good financial books focused specifically on Canada. I did find the narrative side of the book quite strange, but I just assumed there was some kind of story behind that and mostly ignored it. I also do wish that the author included more information on a financial strategy that involved a public sector pension, but maybe there's a different book for that.

I propose that you allocate a fixed percentage of your gross income to just those three items: retirement saving, mortgage payments and daycare expenses. The cost of each of those items can be allowed to vary from year to year, but the sum should always be the same. Think of retirement saving as the balancing item.

[Vivian · Rating 5 out of 5]

Enjoyed this read a ton! Finally a fun and positive way to learn about saving for retirement. YES! IT DOES NOT HAVE TO BE BORING / PAINFUL. This book gives you a really good start in understanding different things that you have to consider when you plan for retirement.

I especially appreciate the dialogue style of writing which really makes it stick and easy to digest. The author is obviously very intelligent but also artistic to present nerdy topics like assumptions, scenarios, forecasts, inverse relationship (interest rate vs. bond price)... etc in an easy-to-consume + story-telling way. As a Canadian, I am very pleased to see a book that is so relatable to us (touching on RSP / TFSA / CPP / OAS). On top of that, this is a relatively recent publish, so I am not reading some concepts that are 20 years old that potentially could be outdated by now.

Learned a lot, and I cannot wait to read more work from Mr. Vettese.

[AHZ · Rating 3 out of 5]

3.25/5 for this one. Having read a fair share of personal finance books, this one felt rather convoluted. The "Rule of 30" core concept isn't effectively explained until the end, leaving us to piece things together. While I typically appreciate books that incorporate 'real-life' dialogues, this one fell flat and seemed to cater exclusively to a specific demographic.

Another major drawback is the lack of emphasis on the emotional discipline required to adhere to the financial plan. Expecting individuals to save less in their early income years and ramp it up significantly later feels impractical. The book doesn't adequately address lifestyle creep and other financial losses. Moreover, it seems to assume that people will work continuously until retirement and be able to increase their savings as they near it, which might not be realistic for everyone.

[Douglas · Rating 4 out of 5]

Really 3 stars in overall quality - but I appreciated the author's answer to the question of how much to save. His background as an actuary also really helped to solidify the numbers. I thought this was a great, reasonable, and doable answer to the question of how much to save for the long run. This is a question I've grappled with for some time, and would stress myself over on and off when I sat down to crunch numbers. No longer. Bonus points for Canadian contact, and up to date even post-covid (but pre-rising interest rates). Follow the rule of 30, and you're good to go. The scope is limited, and there's lots of filler, but recommended if the question concerns you.

3.5/5, rounded up

[Dawn · Rating 1 out of 5]

While the rule itself might be good, the entire book could have been boiled down into a short newspaper article.
I do not like this genre of finance writing that is written like a fictional story, I just want the information. The stories about a couple and buying a house and maybe having kids and the daughter/father estrangement, all useless information that didn't help me understand any of the financial concepts.
But then, I have determined that this is not a useful book for my circumstances anyway, so maybe I'm just annoyed that the stories didn't apply to me in any way, shape, or form.

[Kathryn Morrison · Rating 4 out of 5]

Oh man, a book where a retired actuary reads spreadsheets to me about retirement planning?! How could I possibly resist! I read this in a day and a half because it was too exciting. No I'm not kidding. I'm really fun at parties.

The author had some hot takes about the economy that I need to chew on, especially before I recommend this book to other people. For actual facts I think I would refer people to the Simple Path to Wealth first, but it's great to have a Canadian personal finance book. I might just read it again for fun.

[Arun Narayanaswamy · Rating 4 out of 5]

Firstly this book is targeted for Canadian audience and I am not Canadian or even been there. But this book is a gem in terms of explaining strategies around financial planning. There is a fictional story built into it and it’s very low touch and does not impact the financial content of the book.
One key take away is the way author relates aging demographics to lower debt and eventually to higher stock prices. Quite well connected and learnt a lot!!
Certainly a very good read for Canadians and for others too who are willing to look beyond country specificities

[Dave B · Rating 5 out of 5]

This is what should be taught in high school instead of the Pythagorean Theorem or Y=mx+B (unless life has lead you down the math route)
I’ve honestly never learned as much as I did from this book and I’m glad I read this while I’m still young(ish).
Highly recommended everyone read this. Set yourself up while you can to live comfortably in retirement. The earlier you start the better you’ll be off!

[Lo · Rating 3 out of 5]

Written in the style of the Wealthy Barber, but more up to date. More for Canadians. I am retired early at 58 as my Employer was ditching long term employees. Got a buyout which ended at 59 1/2. I am in one of his scenarios. I am glad I saved a lot. I just wished I could have owned a home on a single income. Such is life.

[Vicki · Rating 4 out of 5]

Smart guy explaining retirement saving to a young couple, trying to make it simple. It's a very quick read. I feel like I need to go recheck what his premise was for what percent you will earn during retirement. But it's a nice simple rule of thumb. It is Canadian based.

[Camille · Rating 3 out of 5]

The sub-story with Jim’s daughter was unnecessary and unfinished. The book offered some interesting thoughts on the impact of aging demographics. I appreciated the perspective of income smoothing over a lifetime instead of a rigid devotion to saving the same percentage throughout one’s lifetime.

[Jessica · Rating 3 out of 5]

I have been very slowly plodding through this book… I couldn’t finish it. I find it’s just too detailed to be helpful for me, I kept losing focus and getting lost in details. I did appreciate reading something from a Canadian perspective.

[Bruce Morton · Rating 5 out of 5]

This is a great book for the younger generation to learn how they should save for their retirement. Although I am in a later generation, I learned a lot from the book. The author did provide a 2-step process, where you would use the rule of 30 until about 5 years before retirement. Then you would use another process for refinement in your final years of work. My generation can still use the second step for some benefit.

[Princess Banana of Bananaland · Rating 5 out of 5]

WAIT SO WHAT HAPPENED WITH ALYSSA????
Aside from that, a great read if you want to learn more abt finances. A more optimistic take on retirement instead of a finance horror story.

[Jodi Geever · Rating 3 out of 5]

There are many more relevant financial guides available

[Colleen · Rating 4 out of 5]

This book is written by a Canadian so some info doesn't apply but it was an interesting concept.

[Melissa-Kristine Allingham · Rating 2 out of 5]

I don't think I was the target demographic for this book.

[Alice · Rating 3 out of 5]

The format was a little hard to follow, but the advice itself was good.

[Marissa Jardim · Rating 3 out of 5]

I definitely learned a few things from this book and I liked the concept of the rule of 30 (and find it quite helpful/reassuring). At first, I liked the dialogue/conversational way that this book was written in - but it was a bit cringey at times and I found that it dragged on.

[Miranda O’Shea · Rating 3 out of 5]

I enjoyed the writing style, which was very unexpected for non-fiction. It is almost entirely dialogue, which I found kept me interested.

The content was practical and applicable. I will admit, by half way through I couldn’t remember the 1st step of the “Rule of 30”. However, they revisit it in the last chapter, giving you an actionable plan of how to integrate it into your life.

All in all, it was pretty good. I will be passing it along to others to read.

[Simonew · Rating 4 out of 5]

Reminds me in a way of the wealthy barber -but it is different. It has a lot of take aways and might be more useful to someone who is younger than me and not as close to "retirement age". nonetheless I though I thought there was a lot of good info in this book and it was written in a very approachable way
Listened to it again - still very interesting and worth re reading